I have incurred a long term capital LOSS from selling a property in India. The capital loss was calculated considering the indexed cost of acquisition and the value of consideration (i.e. Sale price) . My query is - - Whether the Long Term capital Loss arising out of sale of property can be set-off against the Long Term capitals gains from sale of Equity shares/ Mutual fund units of Equity schemes?

Ans: Yes, if you have incurred any capital loss on selling Equity funds after 31-03-2018, you can set them off against any LTCG.In your case, you can set off this long-term capital loss against Long Term Debt MF capital gain and the balance gain will only be taxable.

Ans: You bought a flat in Chennai for Rs. 29 lakhs in 2009. You sold it for the same price in 2024. This scenario involves calculating the long-term capital loss.

Calculating Long Term Capital Loss
Original Purchase Cost:

You bought the flat for Rs. 29 lakhs in 2009.

Additional Costs:

You paid Rs. 15 lakhs in interest and Rs. 3 lakhs for interiors. However, without bills, it’s tough to claim the interior costs. Interest paid on a home loan is also not considered part of the cost for capital gains purposes.

Sale Price:

You sold the property for Rs. 29 lakhs in 2024.

Indexed Cost of Acquisition:

Indexation helps to adjust the purchase cost to account for inflation. This reduces your capital gains.

Indexed Cost Calculation:
The Cost Inflation Index (CII) for 2009-10 is 148, and for 2023-24, it is 348.

Indexed Cost of Acquisition = Purchase Price * (CII of Sale Year / CII of Purchase Year)

Indexed Cost of Acquisition = 29,00,000 * (348 / 148) = Rs. 68,14,865.54

Long Term Capital Loss
Selling Price: Rs. 29,00,000

Indexed Purchase Price: Rs. 68,14,865.54

Long Term Capital Loss = Selling Price - Indexed Purchase Price
= Rs. 29,00,000 - Rs. 68,14,865.54
= Rs. -39,14,865.54

You have a long-term capital loss of Rs. 39,14,865.54.

Using Indexation Option
You can use indexation to adjust the purchase cost for inflation. This helps to accurately reflect the real value.

Booking Long Term Capital Loss
To book the long-term capital loss, follow these steps:

Document the Sale:

Keep the sale deed and bank statements showing the sale proceeds.

Calculate Indexed Cost:

Use the Cost Inflation Index for the purchase and sale year.

File Income Tax Return:

Declare the long-term capital loss in your ITR. You can carry forward this loss for up to 8 years to set off against future capital gains.

Documents Required
Purchase Deed:

Document from 2009 showing the original purchase price.

Sale Deed:

Document from 2024 showing the sale price.

Bank Statements:

Proof of receipt of sale proceeds.

Cost Inflation Index:

Values for 2009-10 and 2023-24.

Interest Proof:

Though interest isn't included in cost calculation, keep proofs for future reference.

Final Insights
You can claim a long-term capital loss of Rs. 39,14,865.54.
Use indexation to calculate this loss accurately.
Maintain proper documents to support your claim.
File the loss in your income tax return to offset future gains.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: yes, you can set off your long-term capital losses from the sale of property against your long-term capital gains from the sale of equity investments (stocks)

Ans: Yes, long term capital loss can be set off against long term capital gain if earned in the next 8 years